Sunday, May 29, 2011

Medicare Part D

No I am not talking about the Medicare Prescription Benefit program, otherwise known as "Medicare Part D".  In this case, D is for "demagoguery" and I have been on that theme lately due in no small part to the number of sickening and shameless examples that abound. It never ceases to amaze me how people fall for it.

The most recent example that comes to mind has to do with Medicare and the budget plan set forth by Congressman Paul Ryan of Wisconsin. The current set of talking points from the Demagogic National Committee warns us that the Ryan plan will “end Medicare as we know it” --- to which I say, “Hooray!”

Here is how Medicare works. For your entire working life, you are forced to pay 1.45% of your salary toward Medicare (in addition to the 6.2% or so you pay for Social Security, another program in desperate need of overhaul). Your employer kicks in matching amounts. In exchange for your contributions (and assuming you live long enough), you are entitled to Medicare benefits after you retire at 65. What exactly are these benefits? Basically, the government pays your medical bills, or so they claim. They pay a pittance to the medical providers, often less than what it costs them to provide the service, so the providers must either make up for it by charging more to the rest of us, or some simply opt not to accept Medicare patients (in which case you are out of luck). Despite the fact that Medicare pays so little, it is on the road to fiscal insolvency because of the inefficiencies, waste fraud and abuse inherent to a single payer, government run system (just like the one some people want to foist onto the rest of us).

Along comes Paul Ryan and proposes a comprehensive budget plan that takes on sacrosanct albeit inefficient entitlement programs (including Medicare), and the demagogues predictably come out of the woodwork with images of Republicans wanting to push granny over the cliff. Perhaps it would help to know exactly what Mr. Ryan has proposed doing with Medicare:

  1. For those who are 55 and older and otherwise close to retirement, the Ryan plan changes absolutely nothing. Fair is fair. If people have been paying into Medicare all of their lives, they are entitled to what was promised to them. However, if I were in their shoes, I would wish I could opt for what Mr. Ryan is proposing for the rest of us.
  2. For those less than 55, the plan proposes phasing out Medicare in favor of subsidizing senior citizens buying a private insurance plan of their choice. The plan would be means tested in the sense that those who are totally reliant on a modest retirement income would have most if not all of their premiums paid by the government, while those who are more well off would receive less of a government subsidy.

Funny, but it seems to me that the Ryan plan for Medicare is very similar to the Federal Employee Health Benefits (FEHB) program, which I happen to enjoy as a federal employee. FEHB offers up a host of government approved insurance companies who compete for the business of 2 million federal workers, who in turn get to choose from among various insurance plans based on their particular needs and preferences. As a federal employee, I pay for one fourth of the premiums while the government pays for three fourths. As an additional incentive for me to remain as a career federal employee until I am eligible to retire, this nice little arrangement will continue into retirement. (On a side note, I have about three years to go and, though I desperately wish I could go on and do something else, the insurance incentive is probably the main thing that is causing me to persevere.)

The other “funny” thing is that this arrangement only lasts until I turn 65, at which point (under current law) I am forced to go on Medicare instead. I would much rather keep what I have, which is very similar to what is being proposed in the Ryan plan. Anyone in their right mind would prefer this over Medicare in its current form, which is on its way to insolvency anyway unless it is restructured.

As usual, the demagogues are intellectually and morally bankrupt on this issue. If they were really interested in the welfare of the elderly, they would embrace the Ryan plan, which not only puts in place the structural reforms necessary to keep Medicare solvent, but also gives seniors the freedom to make their own choices. But that would take away power from paternalistic politicians, and we can’t have that now, can we?

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